Guest Post: Obama’s Healthcare Speech: Soaring Rhetoric, Scant Imagination

By Marshall Auerback, an investment strategist who writes for the New Deal 2.0.

A history of failed attempts to introduce universal health insurance has left us with a system in which the government pays directly or indirectly for more than half of the nation’s health care, but the actual delivery both of insurance and of care is undertaken by a crazy quilt of private insurers, for-profit hospitals, and other players who add cost without adding value. A Canadian-style single-payer system, in which the government directly provides insurance, would almost surely be both cheaper and more effective than what we now have. And we could do even better if we learned from “integrated” systems, like the Veterans Administration, that directly provide some health care as well as medical insurance.

Yet Obama is not prepared to grasp the nettle. His speech was even weaker than the spin preceding the joint address to Congress suggested. I thought the Obama people were lowering expectations with a view toward a big positive surprise and they managed to go even lower than the bar they set. He took caricatured positions on single payer in order to create a false “centrist” option. The President has basically has reduced the public option to a marginal welfare style program for 5% of the population, rather than seeing it as a way to break the monopoly of the private health insurance companies, thereby helping to reduce costs. He’s basically forcing everybody into a private health insurance run program

The bad news is that Washington currently seems incapable of accepting what the evidence on health care says. The Obama Admininstration remains under the influence of the health insurance and pharmaceutical industry lobbyists, and is captive to a free-market ideology that is wholly inappropriate to health care issues. As a result, it seems determined to pursue policies that will increase the fragmentation of our system and swell the ranks of the uninsured.

We need affordable health care, not health insurance. Just look what is happening in MA. It’s not solving the problem at all, because there was no mechanism introduced to REDUCE HEALTH INSURANCE COSTS. Physicians for a National Health Program’s (PNHP) study of the Massachusetts model found that the state’s 2006 reforms, instead of reducing costs, have been more expensive than expected. The budget overruns have forced the state to siphon about $150 million from safety-net providers such as public hospitals and community clinics:

“We are facing a health-care crisis in this country because private insurers are driving up costs with unnecessary overhead, bloated executive salaries and an unquenchable quest for profits – all at the expense of American consumers,” said Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group. “Massachusetts’ failed attempt at reform is little more than a repeat of experiments that haven’t worked in other states. To repeat that model on a national scale would be nothing short of Einstein’s definition of insanity.” ( )

Yet Massachusetts seems to be the implicit model. Despite the obvious popularity of Medicare, there was no serious discussion of expanding it as a possible public health care option (as we had suggested earlier and there was no attempt to use the public option as a means of expanding choice and competition if a worker was unhappy with the health care program offered by his employer.

The Clinton health care version at least tried to deal with the issue of portability, so that health care did not get tied in directly to employment (a highly germane consideration in a time of double digit unemployment and mounting economic insecurity). There is no hint of that in the Obama plan. If anything, it represented a retrograde step from what was on offer in last year’s campaign via the Clinton or Edwards health care proposals. Most advanced countries have dealt with the defects of private health insurance in a straightforward way, by making health insurance a government service. Through Medicare, the United States has in effect done the same thing for its seniors. We get the status quo The paucity of imagination of the proposals themselves were completely at variance with the President’s soaring rhetoric, something which is unfortunately becoming a recurrent theme of the entire Obama Presidency.

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  1. DoctoRx

    “We need affordable health care, not health insurance.”

    IMO this is the key sentence in Mr. Auerback’s post.

    Having been “in the trenches” for years as both a general internist and consultant cardiologist, I guarantee that one effective way to more cost-effective and better medical care is DEREGULATION. Insurance is parasitic. Do homeowners need plumbing insurance? Most doctors, when faced with a patient who actually pays his or her own bills, are terrified of trying to overcharge. However, when it’s a faceless bothersome third-party payer, that’s a different story.

    And forget utterly abusive list prices that hospitals etc. stick on their services while providing massive discounts to HMOs. This should be banned and in the old days never happened. No one could pay!

    We need more education of physicians and the many implementers of the physician’s recommendations, so that the supply pool is large; and we need catastrophic health care insurance for all Americans. This can be defined on a sliding scale; what is catastrophic for a janitor is not the same as what is catastrophic for most investment bankers. And of course the truly needy require substantial assistance.

    Deregulation brought down costs in trucking and airlines when implemented by . . . Jimmy Carter.

    There was NO medical cost crisis when doctors billed patients directly. Just as the Great Financial Crisis was ginned up in New York and London (e.g.), the healthcare cost “crisis” was ginned up in Washington (though with the best of intentions, to be sure).

    I recognize that there are many points of view, and certainly Mr. Auerback, the President, and most people are of good faith in this most personal of issues.

    I just wish that more people would consider that a small businessman such as a private practitioner cannot overcharge his clients absent the insurer. My concept would take costs out of the system and bring medical practice to parity with that of other professionals such as lawyers and accountants: in charge of their rates and their fate, and forced to defend them face to face with their payer.

      1. Susan Stroud

        The US consumer also subsidizes all the pharma products that the countries you cite use. We overpay so they can have a discount.

        You must also take into account ALL the money these countries are spending in health care. In France it approaches 25% of GDP and when I was there in July the headlines screamed that medical care was not getting to the poorest. One reason – lack of doctors.

        Re: life expectancy, look into how each country assembles this number and the underlying reasons for the result. For the most part lower life expectancy is a function of poor lifestyle choices (obesity, lack of excercise, fast driving, etc) not access to healthcare. Free healthcare is available to everyone here by going to the emergency room (and is used!).

  2. Homebody at Heart

    Yes, insurance companies and big pharma are the biggest part of the problem here but they have spread their money around to our elected officials which is why we can’t get anything resolved.

    I’d like to make the pitch to lower the qualifying age to receive Medicare to 50? I always thought that Medicare was free to seniors but it is not. They pay on a sliding scale based on income. This would remove a lot of folks who have very high rates of private medical insurance into the single payer program, and only of course, if they wanted to go there.

    Younger people, particularly men are pretty cheap to insure. Insurance companies make lots of money off of their insurance premiums because and they don’t like to go to the docter.

    As far as the Chairman of the Senate Finance Committee’s pitching of co-ops for health care, it won’t work! Co-ops work just fine for buying milk and cheese in bulk but it doesn’t translate into health co-ops. Oh, Mr. Baucus! Have you received lots of cash from medical insurance and big pharma? Hmm, I think so!

  3. Alex Michaels

    This seems more like a propoganda piece for a government seizure of the health care system than any kind of thoughtful commentary.

    Even Paul Krugman admits that medicare costs have been rising almost 9% per capita and as a whole medicare has almost 30 trillion in unfunded liabilities making their financial position pretty close to that of Enron or Lehman’s pre-collapse.

    This is what we want to go to in order to fix our health care system? The author is letting ideology trump any common sense practical suggestions on how to improve the system.

    1. Auskalo

      Read a bit of Dean Baker, please,

      The USAmerican Health System is corrupted from head to tail. It’s prohibitively expensive, and doesn’t cover much. If you expend triple, with worst results, try to learn, please.

      Here in Europe, we have a quite good health-care system, and for free, for any EU citizen, with job or jobless.

      An example, last year, one of my newphews, seventeen-years-old, went flying out of track against a rock while skying. He was taken to the hospital in a Medicalized Van (after sending back the helicopter coming to his rescue), because the doctor in the Sky Station realized he was in his last breath. So he should be driven with machine breathing and very carefully to the best hospital nearby (60 miles), to put him in Intensive Care Unit, if he was alive in the hospital.

      He expend three weeks in ICU. Three lobules of his brain were bleeding, doctors made him a hole in his skull just to lower his brain preasure. He was between life and death for a week (with tons of morphyne and other drugs to keep him happy). Then he got asleep, and then totally depressed, for he wasn’t able to speak and coudn’t feel his legs. But my sister, her mother, was there taking his hand… Next week was horrible, but a month later he was walking, then running, then in the bicycle, and even swimming in the sea.

      Now he is studying engineering at university.

      Cost: ZERO euros. The embarrassment of driving 80 miles everyday, for the family, to the hospital.

      Nobody never asked my nephew about health insurance or anything else. He was just taken care, by very professional public servants.

      When my sister called to the doctor of the Sky Station, to say Thank You Very Much From THe Bottom Of My Heart, and for being so brave that you sent back the helicopter and accompanied him in the van…

      He said, thank you very much for your thanks, Mom. We are used to listen to rants, but few people call saying tanks. I’m very pleased to know that everything went fine with your son. Next time, too, I’ll do what my hearts tells me, to save anyone. As far as I’m successful nobody will stop me, helicopters or government. Thank you, Mom. If he comes sometime here skying, tell him to make a visit to the doctors cabine, I’ll give him a cup of coffee or tee. Pleased to now you and thanks for calling.

      It’s just an experience, but in USA it would be the bankruptcy of the whole family.

      After crying for a month everynight, after watching to him unable to speak… WE REALIZED THAT WE WERE WORRIED JUST FOR HIS LIFE, NOT THE MONEY.

      This nephew had been in Idaho learning english in summer. He was very busy answering to all that people he know there, who were sending prayers by e-mail everyday to my sister…

      But now, he’s very proud of being an european. He feels quite sorry of making cry all town, but he knows that it’s been PRICELESS.

      Good night to all of you (in british english, just in case): they are in between, but health is health, don’t bet on it.

      Sorry for the rant.


      1. Buckaroo Banzai

        You people in Europe can keep your health care system. Why do people from all over the world come to the US for health care? Why are there huge hospitals on the US side of the Canadian border that are full of Canadians?

        You pay nothing for your health care, and you get what you pay for.

        My ancestors left Europe because Europe was corrupt, socialist, and you people can’t stop killing yourselves. And you have the nerve to tell us how to run our affairs?

        Thanks, but we’ll remain the beacon of freedom for the world, while you european snobs continue to while away the hours in your sidewalk cafes while muslims overrun your continent.

  4. Doc Holiday

    Auerback is right on. I kept thinking throughout O’s speech. You want the best? You want to decrease cost? You want a platform for improving quality? You want to cover everyone? You want to put the people’s needs first? Where the hell is single payer? The rest is just a dumbshow and giveaway to insurance companies. What on earth do they bring to the table?

  5. Michael Fiorillo

    I don’t recall where it was published, and it was based on an anonymous source (one that I believe will ring true to readers of this site), but during the campaign someone who claimed to have been at Harvard Law during Obama’s time there said that he could always be counted on to to give the most passionate and eloquent argument in favor of the most conventional position. That’s what we saw last night.

    With the passage of every week it becomes more apparent that Obama, having been vetted and receiving the nod years ago from a coven of Big Men (the Pritzkers, hedge fund and PE players, etc.) is there to forestall, divert and deflect any meaningful attempts to control the voracious greed and impunity of our masters. However, events are likely to overwhelm his ability to fend off reality with eloquence, and he may face a powerful backlash when more and more people realize that there is less there than meets the eye and ear.

  6. Hugh

    More precisely, the issue is how to sell out the maximum possible to the insurance, drug, and medical industries. They are the constituents for and to whom whatever bill that is passed will be addressed. In this, the American public are no more than props. So I would agree that care is not the issue. If Doctor Rx wants a fully socialized system in which to work with the government controlling costs and his salary directly, I have no problem with that. Of course, to leave payment directly between patient and physician would be totally insane. It would leave a huge chunk of the population with no access to healthcare, unless we are to believe that doctors are driven by altruism which I can attest almost none are. Alternately, there could be some variation of Medicare for All or single payer where the payer (the government) is socialized but the providers (doctors, clinics, and hospitals) would remain private. As with Medicare when it is allowed to exploit its market share, the government as sole payer could use its market monopoly to determine provider prices and so control cost.

    Obamacare even at this late date and even after Obama’s speech last night remains pretty vague. The public option looks dead. Obama threw it in last night as bone to liberals but he fully expects it to be killed in conference. Obamacare will not work because it contains no mechanisms to control costs. A large public option working in conjunction with Medicare could.

    Perhaps the most insidious part of Obamacare is the individual mandate which could force millions to face a penalty or buy junk insurance with deductibles too high for them ever to use. This would effectively amount to a transfer of wealth from those who had little to insurance company coffers.

    Although it probably won’t happen, the best scenario now would be for Obamacare to be defeated, and then to offer a small bill which outlawed denial of coverage due to prior condition and did not jack up rates as a result, and which prohibited rescission.

    Other than that, healthcare could be revisited in a year or two if and when the economy worsens significantly, and social unrest becomes a concern.

  7. CB

    Excellent guest post and comments as well.

    I was disappointed that Obama had absolutely nothing to say about the dismal state of health of the average American with obesity, diabetes, heart disease hanging over us with our lack of exercise and poor diet. So once again everybody wins, nobody loses and nothing is required of anyone for things to get better through the miracle of legislation.

    I heard only a shuffling of deck chairs being arranging into a different, though still byzantine, pattern than they are now. Rube Goldberg goes to Washington.

  8. Richard Kline

    MA: “We need affordable health care, not health insurance.” In a sentence of few words, exactly. The insurance model _is_ the problem. Countries which have determined that health care should be handled like a utility rather than a discretionary commodity have implemented effective solutions. Without single payer, we won’t—because we can’t. There will be no ‘health care reform’ without completely changing the ripoff, dysfunctional model we have. No one in last year’s election proposed doing that, so none of us should be surprised that nothing like that is on the operating table now.

    MA: “[Obama]’s basically forcing everybody into a private health insurance run program.” This is exactly what he proposed on the campaign stump last year, and what some the other Democratic candidates criticized him for. Now, he is delivering on that promise to the health insurance issue, to pump up their profit margins by forcing the healthy young into shoddy Blue Cross type programs or pools, with no cost containment or effective government control. Obama care is worse than doing nothing, and the monstrosity of a program he and the failed ‘leaders’ in Congress are likely to birth will be a crushing disaster for their party and a misery to the country. Whatever they do will have to be fixed later under more difficult circumstances, after the insurance industry has sucked our marrow. We need single payer, but we are going to be massively sold out by ‘the peoples’ representatives.’ Sick, but ther it is.

    MA: “[Obama] took caricatured positions on single payer in order to create a false “centrist” option.” Obama’s entire _career_ is built on this method, working up a false middle he centrist, really center-right, compromise he claims to be in some way superior than other supposed ‘extremes.’ He is this method; it is him; we won’t see anything else from him, ever, because there is nothing else. No liberal cavalier waiting to ride into the fray: their is no fray so fraught that Barack Obama can’t hold himself above it. Because he doesn’t really care about the outcome—look back at his career, such as it is—only where he’s standing when the dust settles. So no one should be disappointed by his speech, it’s dead on the mark for his shiny, hollow career.

    Michael Fiorillo: “[Obama] could always be counted on to to give the most passionate and eloquent argument in favor of the most conventional position. That’s what we saw last night.” I hadn’t heard that, but it’s a wonderfully apt description of all we’ve seen of him. I’ll bear it in mind.

  9. ronald

    Lowering health care cost means rationing care to the aged, those over 80 get reduced benefits. Heart operations, joint replacements etc.

    1. Francois T

      Lowering health care costs means first and foremost, to know and understand where are the highest costs drivers and why.

      Refer to the PWC study here:

      as a start. Then, have some more of an education with this:

      Rationing is a bogeyman that is totally unhelpful.

    2. run75441


      I “kind of” agree with Francois T. It does mean rationing and it would happen well before the age of 80 and more likely in your first decade. Good health abd life style habits are formed at the point and carry through to the time you are eighty years of age. Getting kids off of a diet of salt, fat, and sugar will change the outcomes for many of them. The most recent group of children “may” have a shorter life span than their parents because of obsesity.

      Here is a 2006 Department of Health study on the 15 major causes of rising healthcare cost . . . obesity caused illness and disorders is amongst them. The fastest growing disorder/illness is diabetes.

  10. run75441


    I am not sure who is right on Massachusett’s healthcare insurance; but, this is a comment by the Boston Globe.

    “The facts – according to the Massachusetts Taxpayers Foundation – are quite different. Its report this spring put the cost to the state taxpayer at about $88 million a year, less than four-tenths of 1 percent of the state budget of $27 billion. Yes, the state recently had to cut benefits for legal immigrants, and safety-net hospital Boston Medical Center has sued for higher state aid. But that is because the recession has cut state revenues, not because universal healthcare is a boondoggle. The main reason costs to the state have been well within expectations? More than half of all the previously uninsured got coverage by buying into their employers’ plans, not by opting for one of the state-subsidized plans.” Boston Globe, “Mass Bashers Take Note: Health Reform is Working, ” August 5, 2009. also: “Health Law Problems are Not the Problem,” July 23, 2009 Massachusetts Tapayers Foundation.

    Marshall, I am not sure your premise on Massachusetts Healthcare reform not working is correct as one group, an indpendent group, is refuting the premise you and others have sttod upon.

    Is Obama lacking in the ability to be pragmatic and logical? Yes, I have to agree; but, he is also very politically astute.

  11. sglover

    I expected Hope’n’Change to sell out on the public option. I just figured he bury the news in a lot of soaring verbiage round about the latter part of the speech. Nixing it in the first five minutes is at least a more **efficient** kind of roll-over than I’ve come to expect from Dems.

    I hope the Greens absolutely fuck the Dems’ chances. They’re sure getting my vote from now on.

  12. Auskalo

    Dear Yves,

    I think that this man is a pearl, because he speaks his mind, with tons of sense, being an investor manager, portfolio strategist, etc. Busines is busines, but common sense should prevale.

    Yesterday, I read an interview to him in and I got quite impressed of his answers about the oil bubble of last year and his expertise on the subject.

    Here is the interview:

    Nice to see him around nakedcapitalism.

    Thank you

  13. eh

    In other words, typical Obama — a stuffed shirt. You only need to look at how he spent his years before the Senate — in the victimization and extortion racket, doing little more than exploiting white guilt to get government handouts for his ‘community’ — to understand what he’s about. He was never scrutinized by the media during the campaign because of fears over ‘racism’; the media’s fawning, due to what was a tidal wave of politically correct gushing about the historic significance of his campaign, was about as disgusting as anything I’ve seen in politics to date (and that’s saying something, when you think about it). Even Obama’s long association with that obnoxious ‘minister’ Wright, someone to whom Obama gave thousands and thousands over years, was given a free pass.

  14. Dan B

    There’s a link today at this site about the possibility of the UK facing blackouts by 2016 that is directly relevant to the future of medical care. Readers here know in detail about the fiscal problems of the USA. Our massive debt is compounded by peak oil, which it now looks like will go down in history as having occurred in 2005. Most fiscal and economic discussion start from the premise that there is a right way to restart grwoth so that the debt can be paid off. Peak oil, which is badly misunderstood for its far-reaching threats to socioeconomic complexity and sustainability, effectively nullifies a restarting of grwoth as we’ve come to know. And indeed the last two spurts of grwoth, dotcom and housing, were phantom/bubbles to keep alive “wealth” creation through the manufacture of debt. Any discussion of the future of healhcare must come to terms with debt and oil.

  15. Keenan

    Dr.Rx writes: “Do homeowners need plumbing insurance?”

    Judging from the junk mail solicitations to insure my water line, gas line, sewer line, pipes, wiring, etc. there evidently are some who seem to believe it.

    The business model of insurance is little different than that of gambling.

  16. Bill

    Healthcare is just another industry that the American government is now trying to destroy. They will do to healthcare what they’ve already done to the steel industry, auto industry, financial industy, software industry….

    If you want to socialize something, go ahead an socialize the legal field whose workers are primarily responible, directly and indirectly, for the mess this country finds itself in.

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